Business & Commercial Lawyers

Law FAQ: NFL & NBA Labor Issues – what is a “CBA” and a lockout? And why would players want to decertify their own union?

What is a Collective Bargaining Agreement?

The NFL and the NBA players belong to unions which negotiate with owners to establish, among other things, player wages and working conditions. The contract between the owners and the union is called a Collective Bargaining Agreement, or “CBA” for short.

What are the owners & players fighting about?

There are various issues at the margins – e.g. free agency rules, trade rules, maximum player contract amounts, etc. However, the big dispute is over money – i.e. the amount of the salary cap that has historically been in included as part of the CBAs for the NFL and the NBA.

What is a salary cap?

A salary cap is the limit on total payroll a team can pay to all players combined. For example, the salary cap for an NBA team was $58.044 million for the 2010-11 season. There are different types of salary as well, ranging from what is referred to as “hard cap” (an absolute, no-exceptions total dollar limit like in the NFL), to a “soft cap” (a total dollar limit with many, many exceptions like in the NBA). By comparison, the MLB does not have a salary cap – which is why the Yankees and Red Sox are able year-in and year-out to essentially buy titles by signing multiple players to exorbitant contracts that no other team can possibly pay.

What is the dispute over the salary cap?

The players would prefer not to have a salary cap at all because that would permit wild-west-MLB-style bidding frenzies that would drive up player salaries. Due to historic momentum, though, it isn’t realistic to expect the cap to be eliminated in the NBA or NFL anytime soon. Generally speaking, the players are satisfied with the way things are. The real dispute is over setting the dollar amount of the cap, which is generally negotiated as a percentage of estimated league revenues. In the NBA, for example, last year’s salary cap of $58.044 million represents 51% of estimated league revenues. The dispute, though, centers not only on the percentage amount – i.e. what constitutes a fair “piece of the pie” for each side – but also on how the underlying estimate of league revenues is calculated. The owners constantly argue that they are losing money and are thus seeking changes to the CBA, whereas the players believe that the owners purposely under-calculate and/or under-report their revenue figures.

What is a lockout?

A lockout is where the employer prevents the employees from working – i.e. literally locks out employees who are otherwise willing to come to work. A lockout is essentially the opposite of a strike, which is where the employees refuse to come to work.

Why would the owners lock out the players?

A lockout is about leverage. Indeed, since players are locked out and not working, they no longer get a paycheck. This obviously puts pressure on the players to agree to changes to the CBA in order to get the money flowing again.

What is decertification?

Decertification is where the players vote to basically disband or dissolve their union and thus, at least as a legal matter, put an end to bargaining with the owners as a collective unit.

Why would players vote to voluntarily decertify or disband their own union? How could that possibly help them?

Contrary to how it may appear on the surface, a vote to decertify does not necessarily mean that the players lack confidence in the union’s position, or that they somehow desire to “go their own way individually” or “each do their own thing” so to speak. Decertification is a legal tactic. Under labor law, there is an exemption/exception to antitrust rules so long as employees are engaged in collective bargaining. Once the players decertify they can file a lawsuit charging antitrust violations against the owners, which is exactly what occurred during the NFL labor dispute when top players like Tom Brady and Peyton Manning agreed to be the named plaintiffs in a lawsuit filed against the NFL. Legal experts disagree on whether the antitrust charges would have ultimately been upheld by the courts; however, the idea is that the charges do at least shift some of leverage back to the players. There is also an argument to be made that if the players were to decertify before the owners declared a lockout (which didn’t occur in either the NFL or the NBA scenario), then the decertification might legally prevent the owners from being able to enforce a lockout.

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